Indonesia Expands Boundary of 0% Tax on Services to Boost Trade Balance
Directorate general of state wealth at the finance ministry, announced an additional capital injection for three state firms with total amount Rp8.57 trillion (US$607.80 million) in this year- Photo by Finance Ministry Office.

JAKARTA (TheInsiderStories) – The realization of energy subsidized in the 2018’s State budget until third quarter (3Q) of 2018 had exceeded the ceiling set. The realization of the energy subsidy has reached Rp54.3 trillion (US$3.7 billion) or 115.9 percent of the targets at Rp46.9 trillion.

According to the Ministry of Finance’s Director General for Budget Askolani, the realization of energy subsidy has grown by 96.7 percent compared to the same period last year. One of the reasons for the increase in the realization was because the government had to pay off the previous year’s unpaid subsidy Rp12 trillion. This payment is also based on the results of the audit of the financial audit agency.

He believed, the energy subsidy budget will certainly continue to increase because the government must adjust subsidies in accordance with the price of the increase in fuel borne by the government from Rp500 per liter to Rp2,000 per liter.

Meanwhile, the realization of electricity subsidies has also rose sharpen to Rp38.2 trillion or 80.2 percent of this year ceiling Rp47.7 trillion or experiencing a growth of 25.2 percent. As a whole the energy subsidies reaching Rp92.5 trillion or 97.9 percent of the targets of Rp94.5 trillion or experiencing a growth of 59.1 percent.

But in the meantime, the realization of non-energy subsidies recorded Rp30.9 trillion or 50 percent of the ceiling of Rp61.7 trillion.

The increase in energy subsidies is predicted to continue to erode the state budget it shown by the consumption of diesel fuel which has only reached 82 percent as of Oct. 15. The Regulatory Agency for Downstream Oil and Gas Activities noted that the solar subsidized quota has only reached 12 million kiloliters, where the total quota determined by the government 14.6 million kiloliters.

The Head Fanshurullah Asa hopes that fuel subsidized distribution does not exceed the quota. This is to anticipate the collapse of the energy sector subsidy budget.

“We give to Pertamina (the state-owned energy producer) 14.6 million kiloliters but Pertamina says it will keep under 14.5 million kiloliters,” he said on Wednesday (17/10).

In order to keep the distribution of subsidies right on target, his side had cooperated with security forces in overseeing the spread of this fuel. In addition, the agency also cooperated with a number of regional governments to tighten the accuracy of the data on fuel distribution.

However, Finance Minister Sri Mulyani Indrawati is optimistic that the 2018 state budget deficit is still around 1.83 percent to 2 percent of gross domestic products (GDP) even the subsidies swelled. That figure is lower than this year target of 2.19 percent of GDP and the previous projection of 2.12 percent of GDP.

The minister reported that the 2018’s State Budget deficit until 3Q was Rp200.2 trillion, or equivalent to 1.35 percent of GDP. The deficit was lower than the same period last year worth of Rp272 trillion.

State revenues recorded Rp1,312.3 trillion or 69.3 percent of the target, grew 19 percent compared to the same period of last year. The realization of tax revenue has reached Rp900.9 trillion or 63.3 percent of the target, customs tax amounted to Rp123.6 trillion or 63.7 percent of the target and Non-Tax State Revenues had reached Rp281.4 trillion or 102.2 percent of the target.

In terms of state expenditure, Indrawati explained, the realization of expenditure was recorded at Rp1,512 trillion or 68.1 percent of the ceiling at Rp2,220 trillion. The central government expenditure was Rp938.8 trillion or 64.5 percent of the target, while the realization of transfers to the regions and village funds reached Rp573.8 trillion or 74.9 percent of the ceiling.

She added, the government also could reduce the primary balance number to a deficit of Rp2.4 trillion in September 2018. That figure is lower than last year’s primary balance deficit position of Rp99.2 trillion.